Marius Berger’s research while affiliated with ZEW - Leibniz Centre for European Economic Research and other places

Green startups are a major driver of eco-innovation and as such a major contributor to climate change mitigation and green growth. However, they often lack sufficient funding from investors. Our study focuses on the factors that determine venture capital investors to invest in green startups. In particular, we analyze how information about i) the investments into green startups of other investors and ii) investment provision by public institutions affect the willingness of investors to act accordingly. We combine data from an online survey with angel investors comprising a discrete choice experiment and data from the Mannheim Enterprise Panel. Our findings show that the expectation of future demand for green products and the environmental attitudes of investors can explain whether investors engage in the energy industry. Regarding the effect of information provision, we find that investors strongly respond to information on both investments in green startups by other investors and public investment in green startups. However, in both cases, investors reduce their investments in green startups after receiving the information. We show that this is due to investors largely overestimating the share of investments in green startups by others and due to a crowding out of private investment by investments of public institutions.

Im vorliegenden Bericht werden technologie- und wissensorientierte Gründungen im Kontext der gesamten Innovationspolitik des Landes NRW untersucht. Dabei wird insbesondere ein Blick auf deren Bedeutung für das Innovationsgeschehen des Landes und die von ihnen ausgehenden Wachstums- und Beschäftigungsimpulse geworfen.

Research suggests that public subsidies for newly founded firms have a positive effect on follow-on financing, in particular on Venture Capital (VC), through providing certification and early-stage liquidity. This study shows that the various sources of VC value public start-up subsidies differently. It is the first to differentiate between distinct types of investors who pursue different investment strategies. We show for a large sample of knowledge-intensive start-ups that there is indeed a correlation between subsidies and all sources of VC (Government VC, Independent VC, Corporate VC, and Business Angels). However, when accounting for firm characteristics that drive both selection into public subsidies as well as into VC financing through econometric matching techniques, subsidies are no longer linked to all types, but mainly to Government VC and Business Angel financing. We discuss possible explanations for this finding and implications for entrepreneurial finance.